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by Vault Law Editors | July 07, 2009


There have been no shortage of journalistic attempts at a comprehensive explanation of how we have arrived at our present economic grief.  (Topping the list must be Michael Lewis’ The End of Wall Street’s Boom, Henry Blodgett’s Why Wall Street Always Blows It, and This American Life’s The Giant Pool of Money.)

Now comes Matt Taibbi ‘s Rolling Stone piece The Great American Bubble Machine.  His thesis: it’s all Goldman Sachs’ fault. Channeling the bile and apocalyptic imagery of Hunter S. Thompson, Taibbi lays out a case for Goldman Sachs as an evil, omniscient puppet master, singlehandedly engineering—and of course gorging itself on profits from—every market bubble of the last 100 years.  (Goldman consiglieres Sullivan & Cromwell are entirely absent from Taibbi’s account.)  Readers used to the sober understatement of, say, the Abovethelaw comments section, might be struck by the piece’s hyperbolism.   To wit:  

The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming it blood funnel into anything that smells like money.

Goldman went beserk with lending lust…

Goldman’s mantra of ‘long term greedy’ vanished into thin air as the game became about getting your check before the melon hit the pavement.

If you laddered and spun 50 Internet IPOs that went bust within a year, so what?  By the time the SEC got around to fining your firm $110 million, the yacht you bought with your IPO bonuses was already six years old.  Besides, you were probably out of Goldman by then, running the U.S. Treasury or maybe the state of New Jersey.

At least with the other banks, you could say that they were just dumb—they believed what they were selling, and it blew them up.  Goldman knew what it was doing.

And on and on it goes.  You can’t say it’s boring.  

Whatever one says or wants to believe about Goldman Sachs, we can stipulate that they are tetchy about their brand image.   Back in April, crusading anti-Goldman blogger Mike Morgan (!)  filed suit against the investment bank holding company in a preemptive move after he received a hamfisted (and ultimately pointless) Chadbourne & Park-authored ‘cease and desist’ letter. 

So now that Goldman is being accused of monumental, earthshaking  fraud (“It’s the heart of securities fraud”), not by an obscure blog, but in a national magazinehow will it respond?  Thus far, the bank’s only public comment has been, according to Time, "Taibbi's article is a compilation of just about every conspiracy theory ever dreamed up about Goldman Sachs, but what real substance is there to support the theories?"  

To which a conspiracy-minded type might respond, “Interesting—that’s not exactly a denial.”

                                                                 -posted by brian

UPDATE: I was late to this--Derek had already blogged about it (no link).  Goldman actually has responded a bit more vigorously.  See this NYP story:

 The bank's spokesman, Lucas Van Praag, was more pointed: "[Taibbi's] story is an hysterical compilation of conspiracy theories," he wrote in an e-mail. "Notable ones missing are Goldman Sachs as the third shooter [in John F. Kennedy's assassination] and faking the first lunar landing."


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